Research › Search › Judgment

Jharkhand High Court · body

2023 DIGILAW 1488 (JHR)

Ashok Kumar Ghosh v. Pramod Behl

2023-12-19

GAUTAM KUMAR CHOUDHARY

body2023
JUDGMENT : GAUTAM KUMAR CHOUDHARY, J. 1. Heard, learned counsel for the parties. 2. Judgment and decree passed by Subordinate Judge-VI, Ranchi in Title Suit No. 116 of 2001 whereby and whereunder the suit of the appellant/plaintiff has been dismissed, is under challenge in the first appeal. Cross-Objection No. 04/2006 has been preferred for a decree of Rs. 2,59,30,764.00 with interest at the rate of 21% per annum. 3. Plaintiff is the land owner and the suit was filed for cancellation/termination of the development agreement dated 11.2.1999 between the Plaintiff and the Defendant. Plaintiff claimed the contract to have been discharged by way of breach on the part of the defendant who had failed to construct the building within the stipulated time and thereby violated the terms of the agreement. In view of the breach, the Defendant was entitled to get only the construction cost with respect to part construction done. PLAINTIFF’S CASE 4. Plaintiff got the plan sanctioned for construction of a multi-storeyed commercial-cum- residential building and started construction. Agreement between the Plaintiff and Defendant was converted into a Development agreement entered on 11.02.1999 between both parties with respect to the plot of land fully detailed in the Schedule comprising an area of 05 Kathas. As per term of agreement, it was for a period of 18 months i.e. up to 12th August, 2000 and the work was to be executed as per building plan duly sanctioned in B.C. Case No. 865 of 1996. 5. The work could not be executed by the defendant during the stipulated period of 18 months and there was deviation and consequently, the plaintiff filed the suit for breach of contract and for compensation/ damages @ Rs. 1000/- per day commencing from 12th August, 2000. Further breach was that defendant blocked fire escape passage. The work was not completed within stipulated time and the project itself was abandoned leaving plaintiff in lurch. Defendant encroached other land by constructing a concrete roof generator room. Extra room on the ground floor was constructed which resulted in reduction of the open space in the lobby area. All the shops shown to be in the share of the developer on the ground floor was connected and converted into a hall with toilet inside the hall which was not as per the sanctioned plan. 6. Extra room on the ground floor was constructed which resulted in reduction of the open space in the lobby area. All the shops shown to be in the share of the developer on the ground floor was connected and converted into a hall with toilet inside the hall which was not as per the sanctioned plan. 6. Exterior portion of the building as well as the interior of the bathroom was not completed. The sump had not been constructed, notified fire-fighting system which had neither been purchased nor was installed. The overhead tank for supply of water to the would-be occupants and electrical connections inside the building was also improper and incomplete. 7. The suit was filed for the following reliefs: (a) A decree for declaration that the defendant violated the terms and conditions of the said agreement which was discharged by way of a breach of the terms and conditions. (b) Defendant was only entitled to the cost of the part construction done by him during the subsistence of the said agreement. DEFENDANT’S CASE 8. As per the case of the defendant, there was no breach on the part of defendant, rather the delay in execution of the project was due to expiry of the sanctioned plan midway and the same was not renewed by the Plaintiff. The building map which was sanctioned for three years expired on 13.02.2000 and was not revalidated. Defendant was precluded from executing the work. 9. Further plea is that as per Clause III of the agreement, the plaintiff was obligated to execute the power of attorney in favour of defendant which was not done. Consequently, Defendant could not take any step for revalidation of the map. 10. Breach of undertaking on the part of the Plaintiff to execute and give separate power of attorney, to enable him to mobilize fund by disposing the deconstructed area for share or by transferring the flats after its completion, created hindrance in various ways. 11. Huge electrical dues over the building was also concealed, consequently defendant had to use generator which caused loss as well as obstruction in completion of the work of construction. 12. With regard to non-payment of Rs. 2,30,000/- it is averred that as there was no time stipulation for the payment and the construction was not complete, therefore, it was premature to raise the demand. However, out of the said amount, Rs. 12. With regard to non-payment of Rs. 2,30,000/- it is averred that as there was no time stipulation for the payment and the construction was not complete, therefore, it was premature to raise the demand. However, out of the said amount, Rs. 1,20,000/- was paid by the defendant. 13. In fact, the defendant had invested Rs. 1,35,01,338.95 in the construction work done in the said building complex and suffered loss due to breach on the part of the plaintiff for which counter claim was raised for a sum of Rs. 2,59,30,764.00. 14. On the basis of pleadings of the parties following main issues were framed: (v) Whether the action of the plaintiff cancelling/terminating/discharging the agreement dated 11.02.1999 entered into between the parties is proper, legal, valid and binding upon the parties? (vi) Whether the defendant has violated the terms and condition of the agreement dated 11.02.1999? (viii) Whether the defendant is liable to pay compensation or liquidated damages @ Rs. 1000/- per day or otherwise from 12.08.2000 or any other day? (x) Whether any notice regarding breach of provisions of agreement was given by the plaintiffs to the defendant, and if so on what date? (xi) Whether the defendant has a right to remain and continue in possession for completion of the project/construction as envisaged in the agreement dated 11.02.1999 till such further time as may be necessary for completion of the project? (xii) Whether the defendant is entitled for a decree of his claim of Rs. 2,59,30,764/- with interest? (xiv) Whether the plaintiffs are not entitled to take possession of and/or alienate whole or part of the constructed building till the same is duly handed over by the defendant to the plaintiffs as per the agreement? 15. The learned trial Court dismissed the suit by returning following finding of facts: (i) Issue No. (v). Almost entire work had been completed by 13.02.2000 as was evident from Exhibit N and N/1 which was the report of the Expert Architect. Oral evidence of DW-2 and DW-7 corroborated the documentary evidence regarding completion of substantial part of work. Work could not be completed in its entirety within the stipulated time of 18 months, for the reason that building sanctioned map expired on 13.02.2000 and subsequent thereto sanction of map was not revalidated by the Plaintiffs. Oral evidence of DW-2 and DW-7 corroborated the documentary evidence regarding completion of substantial part of work. Work could not be completed in its entirety within the stipulated time of 18 months, for the reason that building sanctioned map expired on 13.02.2000 and subsequent thereto sanction of map was not revalidated by the Plaintiffs. It was the responsibility of Plaintiffs for getting it revalidated as the map had originally been sanctioned on their application and they had moved the competent authority for re-validation which is evident from exhibit C series. (ii) To facilitate the process of re-validation, defendant had sent a letter (Ext-D) to the Plaintiff’s for executing a power-of-attorney to permit them to move before appropriate authority for obtaining the revalidation order, which was ignored by the Plaintiff’s. (iii) The plea of Plaintiff that in execution of the work there was deviation from the sanctioned building plan has been rejected by the learned trial Court on the evidence of the architect (DW-5). 16. Furthermore, defendant was under an obligation to pay Rs. 2,30,000 to the Plaintiff’s as per the terms of agreement dated 11.02.1999 (Ext.2). 17. In the result Plaintiff’s suit was dismissed with a direction to hand over the entire complex to the defendant as per the agreement, to complete the remaining works and also directed to execute the power of attorney in favour of the defendant to represent himself before competent authority to obtain necessary revalidation order. The remaining works to be completed by the defendant within 6 months from the date of the revalidation order. 18. The main question for determination before this Court is: (I) Which party was responsible for the breach of agreement and if so, which party was responsible to pay damage? (II) Whether cancellation/termination of the agreement by plaintiffs/appellants terminating the development agreement was justified or not? (III) Whether the Defendant was entitled to the counter claim. 19. For better appreciation the list of date is set out as under: 14.02.1997 Building plan sanctioned for three years 11.02.1999 Development Agreement between Plaintiff and Defendant 12.08.2000 Work to be completed by the defendant as per the term of agreement 13.02.2000 Building plan looses its validity on not being revalidated 18.05.2001 Agreement terminated by notice 20. Development agreement entered on 11.02.1999 and the date for completing the construction work was 12.08.2000 is not in dispute. The agreement was terminated by letter dated 18.05.2001. Development agreement entered on 11.02.1999 and the date for completing the construction work was 12.08.2000 is not in dispute. The agreement was terminated by letter dated 18.05.2001. Admittedly, map sanctioned by letter dated 26.08.1996 (Exhibit 7) which was for a period for three years, expired on 13.02.2000. Plaintiff admittedly terminated the agreement by their notice dated 18.05.2001. 21. There is overwhelming evidence that map was to be revalidated by the Plaintiffs, which they failed to do so. 22. Defendant developer was involved in the construction work much before the date of agreement is evident from Para-11 of the written statement. 23. The main contention of the appellants is that much before the date of expiration of the building plan, the defendant had committed breach of contract. In support of this contention, Exhibit-L on behalf of defendant, is relied which is Site Register from 04.04.1997 and the last entry 18.05.2000. It is submitted that this will go to show that after 18th May, 2000 construction work had been stopped much before expiry of the building map on 13.02.2000. As per the term of agreement, the work was to be completed by 12.08.2000. 24. The picture that emerges from the pleading of the Plaintiff itself that the substantial part of construction was completed and what was left was only peripheral part like finishing, installation of generator, construction of sump. 25. While considering any breach of the terms of contract what is needed to be seen is whether the breach is about the essential part and material part of the agreement, or a trivial or peripheral of it. If the breach is not of the essential part, party cannot claim to avoid the agreement in its entirety, but can claim only damages for the part of the breach committed by the other side. It has been held in Manokji Framji vs. Firm of Maniklal Pritamdas, 1923 SCC Online Sind JC 6 : AIR 1924 Sind 105 (1) at page 105: 3. Thereby, is meant breach in respect of any terms of the indent which went to the root of the contract. It is well established that not every breach but breach of an essential term alone by one party entitles the other to repudiate the contract, the breach in non-essential terms entitling the other party to damages only. 26. Thereby, is meant breach in respect of any terms of the indent which went to the root of the contract. It is well established that not every breach but breach of an essential term alone by one party entitles the other to repudiate the contract, the breach in non-essential terms entitling the other party to damages only. 26. On the issue when time can be regarded as an essence of contract, law is settled that in all cases failure to perform the contract within the stipulated time does not entitle the aggrieved party to repudiate the contract. It has been held in M/s. Hind Construction Contractors vs. State of Maharashtra, (1979) 2 SCC 70 at page 76 whether time was the essence of contract will depend on various factor and not merely expression used in the agreement. It was held that it shall be regarded as the essence on the construction of contract where its breach will entitle the innocent party to repudiate the contract. Further in M/s. Citadel Fine Pharmaceuticals vs. M/s. Ramaniyam Real Estates (P) Ltd. (2011) 9 SCC 147 : “The settled law seems to be that in a case for specific performance of contract relating to immovable property, time is not normally of the essence. However, this is not an absolute proposition and it has several exceptions.” 27. Defendant was intimately involved in the project since before formal agreement is indisputable as is evident from the pleadings of the parties. Therefore, it cannot be said that the defendant was completely oblivious about validity period of the sanctioned map which was to come to an end on 13.02.2000, whereas the term of agreement was to expire on 12.08.2000. As discussed above entries made in the site register, which has been exhibited on behalf of the defendant is a testimony to the fact that the work had been stopped for all intent and purpose by 18.05.2000. 28. In view of the plea of the Plaintiff that construction of the building had commenced before signing of the formal agreement, argument is not tenable that there had been deviation from the construction plan resulting in the plinth of the building of the ground floor was so low that water flooded in it during the rainy season. 28. In view of the plea of the Plaintiff that construction of the building had commenced before signing of the formal agreement, argument is not tenable that there had been deviation from the construction plan resulting in the plinth of the building of the ground floor was so low that water flooded in it during the rainy season. This is for the obvious reason that Building Plan was got sanctioned by the Plaintiff and construction had commenced when the defendant had not been inducted as a contractor in terms of the development agreement. Plinth work is done at initial stage and therefore, any lapse in the construction cannot be attributed solely to the defendant. 29. None other than the Defendant (DW-8) has admitted in testimony that part of the contract had not been completed by the defendant as per agreement. He admitted that as per the agreement he had to install generator of 32 kilo watt, which he could not do due to the remaining work. He also admitted in the cross-examination that he had done extra work to the tune of Rs. 49,000/- on the instruction of Philips India ltd. 30. DW-5 admitted in Para-39-40 that passage had been blocked temporarily which was not as per the sanctioned map. A hall had been constructed on the ground floor which was not in the sanctioned plan. 31. Plea that contract failed because the map had not been revalidated by the Plaintiff, does not inspire confidence for the reason that the civil construction work and casting of the 4th floor had been completed by 16.10.1998 (Ext.L). After it the works to be completed was in the nature of finishing and internal works, which could not have been stopped because the revalidation of the map was not done. Failure of the Plaintiff to get the building revalidated cannot be said to be the proximate cause for breach. 32. In view of the above discussion, this Court is of the view that substantial part of the civil construction work had been completed and the dispute arose at the fag end of its execution on the non-completion of works like non-installation of generator, non-completion of the internal finishing of bathrooms and such peripheral part of the work. 32. In view of the above discussion, this Court is of the view that substantial part of the civil construction work had been completed and the dispute arose at the fag end of its execution on the non-completion of works like non-installation of generator, non-completion of the internal finishing of bathrooms and such peripheral part of the work. Time of completion of construction work was not the essence of contract so as to entitle the Plaintiffs to repudiate the contract in its entirety, particularly when the construction had been almost completed and only peripheral part remained to be completed. 33. Therefore, I do not find any fault in the finding of the learned Court below wherein breach of contract has not been attributed to the Defendant. The Court has taken into consideration both contractual obligations and equitable principles while directing the Plaintiffs to hand over to the Defendant to complete the remaining part of the construction work and hand over the portion of the building to the plaintiff as per the term of the agreement. Cross Objection No. 04/2006 34. Cross objection has been filed for a decree of Rs. 2,59,30,764.00 with interest at the rate of 21% per annum. 35. In Cross Objection, it is submitted that the learned Trial Court in operative part of the order has stipulated that entire complex to be handed over to the defendant as stated in the agreement and the work was to be completed by the defendant. Further, direction was given to execute the power of attorney in favour of the defendant to represent himself before the competent authority to obtain necessary revalidation order within one month from the date of this order, failing which the Plaintiffs would be liable to pay Rs. 1000/- per day as compensation with interest @ 8% per annum over the amount as mentioned in Exhibit 6 from the date of institution of suit. 36. Ext-Q is the calculation made by the defendant in building the structure, which includes expenditure incurred in excavation of foundation trench, sand filling, brickwork, relying concrete foundation. 37. I find much force in the argument on behalf of the Appellant that when the agreement was entered after casting of the 4th floor as will be evident from Ext-L, the liability is discharged on payment of Rs. 2,30,000/- as stated in the agreement. 37. I find much force in the argument on behalf of the Appellant that when the agreement was entered after casting of the 4th floor as will be evident from Ext-L, the liability is discharged on payment of Rs. 2,30,000/- as stated in the agreement. Therefore, any expense in the construction work which was incurred by the developer before the date of agreement will not be admissible. It shall be deemed that payment of Rs. 2,30,000 was full and final discharge of financial liability of the Plaintiffs. 38. This will however not mean, that the Defendant shall be excused from completing the construction as per the agreement and to hand over possession of the part of the building to the Plaintiffs. The plaintiffs shall also on his part be liable to perform his part as per the agreement to enable the Defendant to take his share as per the agreement which will enable him to sell or dispose of the part of his suit property. Under Clause III of the agreement, the plaintiffs are obligated to execute power of attorney in favour of defendant. Other terms and conditions of the agreement shall be binding on the parties. 39. In the result the appeal stands dismissed. Finding of fact of the learned Court below needs no interference. The Judgment and decree passed by the learned Court below is affirmed. 40. First Appeal and Cross-Objection stand dismissed.